Advantages of Nearshore, Onshore and Offshore Outsourcing

What is Outsourcing?

Outsourcing is a practice used by different companies to reduce costs by transferring portions of work to outside suppliers rather than completing it internally.

Outsourcing is an effective cost-saving strategy when used properly. It is sometimes more affordable to purchase a good from companies with than it is to produce the good internally.

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What is Onshore, Offshore and Nearshore?

Onshore:

Onshore outsourcing is the closest outsourcing to home because you are working with a company that is located in your home country. The advantage of onshore outsourcing is that you’re working a team from and in your own country, but this option comes with a high price tag. Onshore teams simply cannot compete with the prices of offshore and nearshore companies.

Another drawback of onshore outsourcing besides its price is that onshore companies often don’t have the right talent available right away simply because they can’t afford to maintain any unoccupied workers. So when you hire an onshore company, you need take into account the time the company requires to hire and train the talent you need.

Offshore:

Offshoring usually refers to working with teams in far-away countries (Based on your location it can be India, China, Ukraine and others) While the cost of working with offshore companies cannot be beaten, there are some drawbacks that one should consider.

Working with a team that is on the other side of the globe in a completely different time zone makes communication a lot more difficult, and we all know that communication is key for high-quality, cost and time-efficient work. Being twelve hours apart simply complicates any type of communication.

Also, longer waiting times and miscommunication because of language barriers and cultural differences can easily end up raising the costs again, and this doesn’t include the stress you had to go through in the process. But ultimately, if the lowest hourly rate is your priority, offshore outsourcing is most likely your best option.

Nearshore:

Nearshoring works just like offshoring except that your business pairs with workers in similar time zones, which makes communication much more pleasant. Even onsite visits can happen faster and more frequently. Plus, compared to onshore outsourcing, nearshore still offers cost savings.

Another good trait would be the fact that Nearshore can offer communication in your native language, breaking communications but also cultural barriers.

However, in the end nearshore cannot compete with the hourly rates of offshore companies, but the convenience of being in the same or a similar time zone and having shorter travel times for onsite visits not only decreases costs but also stress for you and your company.

Why choose to Outsource?

Main reasons why companies outsource:

  • It allows companies to focus on Core Business Functions once non-core activities like administration and back-office are outsourced.
  • Reduce overhead, freeing up internal resources
  • Control organization functions that become operationally uncontrollable and/or unsustainable.
  • Achieve resource flexibility and capacity management, which allows companies to adjust quickly to market dynamics.
  • Free up capital by reducing investments in technology, infrastructure and people that make up the bulk of capital expenditure for back-end processes.
  • Invest in more market opportunities, which can enhance returns on investment.
  • It enables companies to be flexible
  • Efficiency and improved Services while there is no need for internal trainings and workshops, the work is in the hands of experts
  • It saves time, money and headaches

Quote of the day:

“If you deprive yourself of outsourcing and your competitors do not, you’re putting yourself out of business.”
– Lee Kuan Yew

Bibliography:

Onshore, Offshore, Nearshore: What’s Your Best Option?
Advantages of Nearshore vs. Offshore Outsourcing
Outsourcing